Retirees are prime targets for con artists and swindlers. Many have money in the bank. They're wary of the stock market and tired of earning less than 3% on a certificate of deposit. Even better, they're often too polite to hang up on a smooth-talking solicitor. In today's Managing Your Money, we look at scams, schemes and bad investments that threaten seniors' financial security.

Variable annuities:

Variable annuities are usually unsuitable for older investors, but that hasn't stopped brokers and advisers from recommending them, securities regulators say.

Variable annuities are tax-deferred retirement savings accounts that allow investors to move their money among accounts that are similar to mutual funds. Many come with hefty penalties on withdrawals taken during the first few years. If you need money for health care or other expenses, you could lose a big chunk of your investment.

In July, Bank of America agreed to waive early withdrawal penalties on variable annuities sold to investors 78 and older. The waiver was part of an agreement with Massachusetts Secretary of State William Galvin. Galvin also fined Citizens Bank affiliate CCO Investment Services $3 million for unethical conduct in connection with the sale of variable annuities to older customers. The complaint charged that tellers at a Citizens Bank branch were rewarded for referring elderly customers, particularly those with maturing certificates of deposit, to the affiliate's brokers. Citizens agreed to discontinue the practice and offered older customers the opportunity to recover their investments without penalty.

Securities regulators have increased scrutiny of variable annuities sales to older investors, but the problem persists, says Patricia Struck, president of the North American Securities Administrators Association and administrator for the Wisconsin Division of Securities. Variable annuities are complex products, and investors don't always understand what they're buying, she says. In addition, "often the people that are selling them don't know what they're selling," Struck says.

Family fraud:

As unsavory as it sounds, theft from family members is one of the most common and underreported types of elder abuse, says Helen Marks Dicks, director of the Elder Law Center at the Coalition of Wisconsin Aging Groups.

In many cases, the problem begins when a retiree gives power of attorney or other legal authority to an adult child or other family member, she says. Unscrupulous relatives use this authority to transfer homes to their names or drain the senior's savings accounts. The crime often goes undetected until the senior is impoverished, she says.

Many financial advisers recommend giving someone authority to handle your financial affairs if you become incapacitated. But "you really have to be careful about who you choose to handle your money," Dicks says. In a financial crisis, the relative might be tempted to dip into your savings.

How to protect yourself:

• Create an accountability system. If you give an adult child power of attorney, inform your other children, and ask the child to give them an annual report.

• Resist pressure to transfer money and property into your children's names to preserve their inheritance. Many retirees worry about rules that require them to reduce their savings and other assets to certain levels to qualify for Medicaid coverage of nursing home care. But to preserve eligibility, you have to transfer assets at least 36 months before you apply for Medicaid.

And giving your money away might limit your choices later. For example, suppose you're healthy enough to stay in your home but need $2,000 to install a wheelchair ramp, Dicks says. If your children have spent or invested the money, "there's no way to get it back," she says.

• Don't make relatives joint owners of your home or bank accounts. If relations turn sour, a child could clean out savings or stop you from selling your home. "If you've started with a dysfunctional family, you're going to end up with a dysfunctional family," she says.

Identity theft:

Criminals are exploiting confusion about Medicare discount drug cards to steal personal information from retirees, regulators say. Phone solicitors claiming to be from the government have tried to get bank account information from retirees to "confirm" their eligibility for the cards, according to the Better Business Bureau.

The new federal prescription drug benefit, Medicare Part D, could spawn more identity theft scams. The barrage of mail, phone calls and sales pitches from drug companies offering the benefit will create a ripe environment for criminals seeking personal information, Maryland Attorney General Joseph Curran said in a statement.

Identity thieves also have targeted nursing home residents. In June, Michigan Attorney General Mike Cox charged a man with using a blind nursing home resident's identity to open a credit card account.

How to protect yourself:

• Reduce calls from phone solicitors by adding your phone number to the Federal Trade Commission's Do Not Call registry. You can register by phone by calling 888-382-1222 or online at www.donotcall.gov.

• If you receive a phone call pitching a product or soliciting charitable contributions, ask the caller to send you more information in the mail. Never give out personal information over the phone, says Paula Fleming, spokeswoman for the Better Business Bureau for eastern Massachusetts, Maine and Vermont.

• Check your credit reports for errors that might point to fraud. You can order a credit report from each of the three credit reporting agencies every 12 months for free. To order online, go to www.annualcreditreport.com; by phone, 877-322-8228.

• Don't put bills or other mail with personal information in unsecured mailboxes.

• Clean out your wallet. Many retirees "carry their lives in their wallets," Fleming says. "There's no need to carry around seven credit cards."

Scams for the ages

About once a year, the North American Securities Administrators Association surveys the top investor scams. The survey shows that crooks like to recycle old scams, and their prime victims are seniors.

Last year, for example, the Pennsylvania Securities Commission broke up a $10.6 million Ponzi scam involving 300 investors in four states and Australia. Advertisements aimed at older investors promised returns of 24%. In Ponzi scams, named after 1920s-era con artist Charles Ponzi, the promoter promises generous returns and uses new investors' money to pay off people who got in earlier. The scheme collapses when it runs out of victims.

Similarly, con artists promote bogus promissory notes, "risk-free" high-yield investments and questionable oil and gas ventures, NASAA said. In one scam, con artists invested less than 30% of investors' funds in oil and gas production and funneled the rest into their own accounts, according to the Kansas Securities Commissioner's office. One of the victims was a man in his 80s who was trying to raise money to care for his wife, who had Alzheimer's disease.

For more information about scams and how to avoid them, check out NASAA's website, www.nasaa.org. Click on "Investor Education" and look for the link to the Senior Investor Resource Center.

The Securities and Exchange Commission publishes a brochure about variable annuities. You can find it under the "Investor Information" link at www.sec.gov.